Education pays off

The next time you hear about a kid that wants to quit school tell them how much it will cost. According to tabulations just released by the U.S. Census Bureau, in 2006, adults 18 and older with a master's, professional or doctoral degree earned an average of $79,946, while those with less than a high school diploma earned about $19,915.
The "2006 Current Population Survey's Annual Social and Economic" supplement, which is conducted in February, March and April at about 100,000 addresses nationwide, also showed adults with a bachelor's degree earned an average of $54,689 in 2005, while those with a high school diploma earned $29,448.
Other highlights from the tables found:
High school graduation rates for women 25 and older continued to exceed those of men, 86 percent and 85 percent, respectively. However, a larger proportion of men held a bachelor's degree or higher (29 percent compared with 27 percent of women).
Non-Hispanic whites had the highest proportion of adults with a high school diploma or higher (91 percent), followed by Asians (87 percent), blacks (81 percent) and Hispanics (59 percent).
Minnesota and Alaska had the highest proportions of people 25 and older with a high school diploma or higher (around 93 percent).
The District of Columbia had the highest proportion of people 25 and older with a bachelor's degree or higher (49 percent).
A sizeable gender earnings gap still exists, according to the Bureau of Labor Statistics, across nearly every occupational category. Overall, full-time working women earn 80 cents to every dollar earned by men. African-American women are paid an average of 67 cents and Hispanic women an average of 56 cents for every $1 earned by a white male.
In related news, the Federal Reserve Bank of St. Louis conducted a study with researchers that found beautiful people tend to earn five percent more an hour than less attractive colleagues. Worse, the Fed found that plain or unattractive workers were penalized for their lack of looks, earning as much as nine percent less an hour.
Heavy white women were penalized for being overweight earning 17 percent less than women within the recommended body mass index range, while short men suffered similar discrimination. Those taller than the national median earned 1.8 percent increase in wages for every additional inch of height.

The Garage

One of the most over looked, under appreciated and over used areas under our roofs is the garage and it’s no wonder. Garages are either too cold in the winter or too hot in the summer. They are dark and cluttered with all manor of junk. Garages have spiders on the walls, cobwebs on the ceilings, oil and transmission fluid on the floor, sharp instruments and half-filled liquid containers of various substances crowded around large vehicles, boats, and other motorized machinery. A garage can also be a temporary home to many critters. While showing this usually unsightly home appendage I have been surprised by snarling dogs, scampering mice, and once stepped on a rather large slithering pet reptile.

Most garages are the largest room under roof but never get the respect that its size should warrant. Listing agents, when describing a home, will write a novel about the kitchen and its features but never mention anything about the garage. When was the last time you saw interior pictures or a virtual tours of a garage on-line?

Many sellers, prior to putting their home on the market, will pack up boxes and otherwise declutter their homes to appear more spacious. So… where do all the boxes and decluttering end up? Right, the garage, along with everything else that doesn’t deserve a more preferred placement.

When previewing homes with clients, my last stop is reluctantly showing the garage. If at all possible I try to avoid opening a stranger’s interior garage door for fear that something will jump or craw out of the darkness. I have developed the “point and switch” technique for effective avoidance. This is how it works: When I have clients engaged in more interesting features of the home, I only point at the garage door hoping that will satisfy my buyer’s exploratory curiosity. Smiling and pointing, “Oh here is the garage door.” Then pointing in the opposite direction. “Now are those kitchen cabinets cherry or maple?” If that avoidance technique doesn’t work and my clients still want to preview the garage I imagine myself as Harrison Ford, entering the Temple of Doom in Raiders of the Lost Ark, gently cracking open the garage door, peeking inside to discover what treasure awaits.

Finding the correct light switch is the first garage hazard. Keeping my clients at a safe distance, I will slowly open the garage door just enough to prevent whatever is in there from getting out and reach my arm through the opening in an attempt to locate the light switch. Then feeling blindly over and under hanging clothing, brooms, behind water-heaters and washing machines I might be fortunate enough to find the correct switch. Not all switches are for the garage lights. In addition to switching on lights, I have inadvertency energized stereo equipment, exterior lights, hot tub jets, and once a whole-house generator.

Homebuyers can be divided into two groups, those who think that the garage is important and those who think it is only a place to park something with wheels. Most women don’t spend a lot of time looking at the features in a garage. It’s a guy thing. But when I am working with a client who appreciates a nice garage and we find one completely finished with 220 outlets, a workbench, cabinets, shop lights, a window, a sub electrical panel, storage racks and maybe a shop sink, wow! I know I have made a sale.

Many sellers, when preparing their home for sale, will forget about the garage. Their landscaping may be meticulous, the home appears to be decorated by Martha Stewart, the aroma of fresh flowers fills the air and while the buyers are drooling, I open the garage door only to discover a liter-box, smelling trash cans and oil stains on the floor.

Most of us make a career out of collecting things. That’s okay until one day we decide to sell our home and think that we might want potential buyers focusing on it, rather than our collectables. We box up all our precious treasures and stack them in the garage along with all the garage collectables. Here’s a better solution. Rent a storage facility. Don’t move all the stuff to a neighbor or another family member, rent space in a mini-storage.

Most garages are in such cluttered condition that when we find a really nice one it makes an impression. “Oh you remember dear, the one with such a nice garage.” Some sellers will spend thousands of remodeling dollars and never think of spending a few bucks to paint and clean the garage. This spring is a good time to show some respect for that unappreciated portion of your house and please leave a light on.

Future housing shortage?

The California Building Industry Association estimates that we need 240,000 homes and apartments built each year just to keep even. They based this analysis on the state’s population increases of 500,000 to 600,000 people a year that we know about.

If their estimates are correct, we are in for another housing shortage in the next few years. New single-family housing permits fell from 155,322 in 2005 to 107,000 last year, a 22 percent drop. New multi-family construction is up slightly (5 percent) but that’s still only another 25,000 units so we are still way short on what we should be building each year. This shortage of new construction starts could continue. According to Alan Nevin, the CBIA chief economist, home construction starts will continue to drop until remaining inventory is sold a process that he expects to be completed by the end of 2007.

Although many housing analysis believe the yearly 240,000 required new housing units are accurate I believe it to be way over estimated. Most of our increased population is from births and not from potential homebuyers relocating to California. Many adult children are continuing to live at home and many families double-up in a home or apartment. Still, the builders make a valid point. We are not building enough units to meet the future demand and the under supply and continued demand will contribute to home prices increasing beyond inflation.

Who is right on home prices

So which is it? Are home prices nationwide down by 3.1 percent or are they up by 5.9 percent? The first number comes from the National Association of Realtors, which reported that the national median existing home price fell by nearly $7,000 from the previous year, an unusually sharp decline.

The second number comes from the federal government agency that tracks home price changes in a giant housing database with over 32 million transactions, including both sales and refinancings. The Office of Federal Housing Enterprise Oversight (OFHEO) said that despite all the headlines about bubbles bursting and local housing values taking beatings, it concludes that the average home in the United States experienced 5.9 percent appreciation last year.
The agency also reported that with the exception of California, portions of the Midwest and New England, home prices generally were positive across the country. In 256 of the 282 major metropolitan markets it studied, prices rose last year; only in 25 was there net depreciation, and prices in one area remained flat.

Which study do you believe? Obviously they can't both be right. Or could they? Or maybe they're both wrong and right in part.
Here's a key clue to the puzzle: Although the two surveys sound like they're talking about value changes in the same giant housing stock, the reality is that they are measuring different houses and different things. Both surveys come with important methodological limitations as well.
NAR's widely-quoted monthly survey measures median prices by state, region, and for the nation as a whole. Its inherent limitation is its reliance on medians-mid-points, with half of all houses sold below and half above. The problem with medians is that the total pool of houses being measured can be influenced by the geographical composition of the sales in the statistical pool during a given period.

During the housing boom years, exceptionally large numbers of dwellings were selling in high-cost, high-population areas such as California and the East Coast. That inevitably pushed up the mid-point or median price nationwide. For the past two years, by contrast, sales in those former boom areas have dropped by 30 percent and more, while sales have grown in lower cost markets with big population bases, such as Texas. That inevitably is pushing the mid-point of all closed sales transactions downward.

So although it sounds grim on the TV news reports, a 3.1 percent drop in the median home price is not precisely what a lot of people may assume.
Now look at the OFHEO data. It, too, has inherent limitations. For starters, its massive database uses only Fannie Mae and Freddie Mac funded or securitized sales and refinancing transactions. That eliminates coverage of what's going on in the significant-and sometimes volatile -- “jumbo,” nonconforming segments of the national market, and under-represents places like California and the Northeast and Middle Atlantic states. At the moment, based on reports from local MLS and other real estate authorities, prices are down in many of these upper-bracket markets that boomed from 2000-2005.

The OFHEO data also omits all condominiums-again a crucial limitation because in places like Miami-South Dade, where OFHEO says average house price appreciation last year was an astounding15.3 percent-the overbuilt condo sector has seen significant price slippage because of investor panic sales and developer discounts that don't show up in the OFHEO numbers.
The NAR existing home sale data, on the other hand, does include condominiums-and thus captures those price declines.

Which numbers are right, the federal government's or NAR's? Probably the answer is that they're both correct in what they are measuring. But they happen to be measuring different things that tend to sound like they're the same when the network news covers them.